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non -Microsoft software hosted in an Online Service by Microsoft on Enrolled Affiliate's behalf misappropriates a trade secret or directly infringes a patent, copyright, trademark, or other proprietary right of a third party; or (2) Enrolled Affiliate's use of any product or Fix, alone or in combination with anything else, `violates the law or damages a third party. s 12. Limitation of liability. ' For each Product. each party's maximum, aggregate liability to the other udder this Agreement is limited to direct damages finally awarded in an amount not to exceed the amounts Enrolled Affiliate was required to pay for the applicable Products Chifing the iterrrr of this Agreement, subject to the following: a. Online Services. For Online Services, Microsoft's maximum liability to Enrolled Affiliate for any incident giving rise to a claim will not exceed the amount Enrolled Affiliate paid for the Online Service during the 12 months before the incident, b. Free Products and Distributable Code. For Products provided free of charge and code that Enrolled Affiliate is authorized to redistribute to third parties without separate payment to Microsoft, Microsoft's liability is limited to direct damages finally awarded up fo USS5,000, c. Exclusions. In no event will either party be liable for indirect, incidental, special, punitive, or consequential damages, or for loss of use, loss of business information, loss of revenue, or interruption of business, however caused or on any theory of liability. d. Exceptions. No limitation or exclusions will apply to liability arising out of either parh%s (1) confidentiality obligations (except for all liability related to Customer Data, which will remain subject to the limitations and exclusions above); (2) defense obligations; or (3) violation of the other party's intellectual property rights. t 13. Verifying compliance. a. Fight to verify compliance. Enrolled Affiliate must keep records relating to all use and distribution of Products by Enrdlled Affiliate and its Affiliates. Microsoft has the right, at its expense, to the extent permitted by applicable law, to verify compliance with the Product's license terms. Enrolled Affiliate must promptly provide the independent auditor with any information the auditor reasonably requests in furtherance of the verification, including access to systems running the Products and evidence of Licenses for Products Enrolled Affiliate hosts, suhlicenses, or distributes to third parties. Enrolled Affiliate agrees to complete Microsoft's self -audit process, which Microsoft may require as an alternative to a third party audit 1). Remedies for non-compliance, If verification or self -audit reveals any unlicensed use or distribution, then within 30 days, (1) Enrolled Affiliate must order sufficient Licenses to cover that use or distribution, and (2) if unlicensed use or distribution is 5°/n or more, Enrollee! Affiliate must reimburse Microsoft for the cost Microsoft has incurred in verification and acquire the necessary additional licenses at '125% of the price based oil the then -current price list and Enrolled Affiliate price level. The unlicensed use percerifage is based on the total number of licenses purchased compared to actual Install base. If there is no unlicensed use, Microsoft Will not subject Enrolled Affiliate toianother verification for at least one year_ By exercising the rights and procedures described above, Microsoft does not waive its rights to enforce this Agreement or to protect its intellectual property by any other means permitted by law. c. Verification process. Microsoft will notify Enrolled Affiliate at least 30 days in advance of its intent to verify Enrolled Affiliate's compliance with the license terins for the Products Enrolled Affiliate and its Affiliates use or distribute. Microsoft will engage an independent auditor, which will be subject to a confidentiality obligation. Any information collected in the self -audit will be used solely for purposes of determining compliance. This verification will take place during normal business hours and in a manner that does not interfere unreasonably with Enrolled Affiliate's operations. J: Ain }Ei:+y3 (l)ti}Sl Ci(ENl�jtNGv2U 1ti} ncrunnenl X2D. I0267 City Council 18 — 105 1/20/2026